It looks like retailers can cross rising interest rates off their list of worries when it comes to consumer spending — for now.
The Federal Reserve Wednesday diverted from its path of nudging up interest rates, holding them steady after a two-day policy meeting and stating that it would be “patient” when it comes to further increases.
Its benchmark interest rate was left in a range between 2.25 percent and 2.5 percent as the Fed took a pause after lifting it nine times since 2015, with the last rise taking place in December. The markets appeared to take the news well, with the Dow Jones Industrial Average closing up 434.90 points, or 1.77 percent, to 25,014.86.
While its unclear how long this dovish tone will last, Fed chairman Jerome Powell gave the biggest signal yet that there might not be any more increases for a while, stating at a press conference that “the case for raising rates has weakened somewhat.” This marks a change from December when he said at least two more rises were on the cards for 2019.
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The move will no doubt be welcomed by retailers, who had been concerned that the Fed’s policy of raising rates last year risked knocking the strong trend of consumer spending off track as maintaining credit-card balances, student loans and many mortgages was becoming more expensive.
The Fed’s apparent change in policy also follows months of criticism from President Donald Trump that the independent rate-setting committee was harming the economy and sending financial markets into a tailspin.
But Powell told reporters that today’s decision had nothing to do with Trump’s rhetoric.
“We’re always going to do what we think is the right thing. We’re never going to take political considerations into account or discuss them as part of our work,” he said.
“What we care about, and really the only thing we care about at the Fed, is doing our job for the American people and using our tools.”